Italy’s dark cloud has a Silvio linin

TOM GILL, reporting from Rome, says that a Silvio Berlusconi victory would be bad for Italians, immigrants, gays and the euro

Italy’s general election is just two months away. Opinion polls for the May 13 vote point to a comeback for the billionaire media magnate, Silvio Berlusconi, and an end to the country’s first experience of Centre-Left government since the Second World War. Italian business is rubbing its hands at the prospect.

However, the powers that be in Brussels and Frankfurt are less pleased.

The European Central Bank and the European Commission are not so concerned with Berlusconi’s allies, the Northern League and National Alliance. Gianfranco Fini, the leader of the “reformed” fascist MSI party is likely to be deputy Prime Minister. The rabid homophobic, xenophobic racist leader of the Northern League, Umberto Bossi, may also get a leading role in the Government. He wants gays kept out of sight, illegal immigrants immediately repatriated and the borders closed to any influences diluting the purity of the Italian race.

The European Commission has distanced itself from the demands of political leaders, such as Belgium’s deputy Prime Minister, who sees Bossi as Italy’s equivalent of Austria’s Jorg Haider and has called for sanctions if he wins a place in the Government.

The still-unresolved conflict of interest between Berlusconi as a future Prime Minister and Berlusconi as the richest man in the country, has embarrassed Europe’s authorities. He remains the owner of three national television channels, Italy’s largest television advertiser and has a vast array of financial and industrial interests.

Yet, it is Berlusconi’s love for Reaganomics that has really got them pulling their hair out. He is offering much the same recipe as in 1994, when he had his first, brief and abortive, experience in power.

Labour market reforms and tax cuts are planned in order to deliver a supply-side shock to Italy’s low-productivity, high-unemployment economy. Berlusconi claims these ingredients, together with a sprinkling of public works, will halve the jobless rate in five years.

Central bankers in Frankfurt and law makers in Brussels love deregu’Berlusconi is the the richest man in Italy’

lation and low taxes, so long as spending cuts are deep. However, despite restrained growth in the Government deficit in recent years, it shot up last year at a time when relatively strong economic growth ought to have boosted tax revenues and helped plug the financial hole.

Although Italy has kept to the European Union’s Growth and Stability Pact targets, the European Commission, which monitors compliance, has repeatedly castigated the country for “lack of ambition” in spending cuts.

With growth slowing this year, the Commission and the European Central Bank are concerned that a tax-cutting Berlusconi Government could miss public finance targets.

Economists argue this could encourage other EU states to break ranks, including France and Germany, which will both soon be preparing budgets for national elections in 2002. This could send the euro plummeting again and delay Britain’s entry to the single currency.

Further, Berlusconi — in:common with Tony Blair — is also keen on beggar-thy-neighbour tax competition between European states. This would undermine efforts promoted by the ECB and Commission for greater fiscal harmonisation. The media magnate, it is feared, may violently rock the Euro boat.

Those on the Centre-Left, on the other hand, have been exceptionally diligent Europeans. With a privatisation programme unmatched in Western Europe, they have flogged off the family silver to bring. Italy’s large public debt down toward Maastricht and Stability Pact levels.

They have also brought inflation and the deficit down to EU-approved targets.

By virtue of a close and disarming relationship with the unions, they have even begun the process of “structurally reforming” the pension system and deregulating the labour market. Compared with Berlusconi, an unknown and possibly dangerous quantity, the Centre-Left is a safe pair of hands.

NEVERTHELESS, Italians beg

to differ. The country, traditionally very pro-European, is less keen on the euro having seen the resulting slower growth, persistently large jobless queues and expansion of flexible job contracts.

Growing insecurity at work and the prospect of welfare downsizing have created fertile ground for racism and intolerance.

Also, the Centre-Left Government, partly due to its desire not to offend big business, failed over the past five years to pass legislation dealing with Berlusconi’s glaring conflict of interest. Under their new leader, Francesco Rutelli, the former Mayor of Rome, they have recently revived the issue but, for many Italians, this smacks of cynical electioneering.

The media baron’s predicted conquest of Rome will, if confirmed, be a dark day for Europe, however one looks at it. The Centre-Left can take much of the blame.